Navigating Leave Without Pay and Salary Deductions: What Are the Legal Boundaries?

1. What are the scenarios where LEAVE WITHOUT PAY is applicable?

2. If a disciplinary issue arises, can an HR hold the salary of an employee?

3. If an employee arrives one hour late, can that one-hour salary be deducted?

4. What legal factors will come into play for the above three cases?

Scenarios Where Leave Without Pay is Applicable

Leave without pay is a situation where someone applies for leave, and even if the leave is granted, they may not have eligible leave to their credit. As a result, one day's salary would be deducted for that month as Leave Without Pay (LOP).

Disciplinary Issues and Salary Withholding

Only in the case of 'Suspension Pending Enquiry,' will an employee not be paid wages. However, they would be eligible for 'Subsistence Allowance' as prescribed under the Standing Orders of the Company during the suspension period.

Deduction for Late Arrival

Yes, if an employee comes one hour late, that one-hour salary can be deducted. This is based on the principle of "No work, No wages." It is advisable to keep a written policy of the company or incorporate this clause in your Standing Orders.

Legal Factors for the Above Cases

All these scenarios are governed by the Standing Orders of the Factory. If it is not a Factory, then the Policy and Procedures of the Company (Employees' Handbook) will apply.

Scenarios for Leave Without Pay

Reply No. 1: An employee goes on leave without having a leave balance in their account, resulting in leave without pay.

Disciplinary Issues and Salary Withholding

Reply No. 2: You cannot hold an employee's salary without a valid reason or in the absence of any policy or provision in the standing order.

Late Arrival and Salary Deduction

Reply No. 3: According to payment norms, deduction is possible. Please check your policy and provisions in the standing order.

Legal Factors for the Above Cases

Reply No. 4: The Payment of Wages Act and the Industrial Disputes Act, as well as the rules and policies adopted in the establishment or by standing order, are applicable.

Thank you.

What are the scenarios where Leave Without Pay is applicable?

Leave Without Pay (LWP) is applicable when the employee does not have any earned leave in their credit. Some employers adjust the leave against the employee's future entitlement. This practice varies depending on the company's leave policy.

If a disciplinary issue arises, can HR withhold an employee's salary?

In the case of a disciplinary issue, if an employee is suspended pending a domestic inquiry and subsequently dismissed upon being found guilty by the Inquiry Officer, you are required to pay the full salary. However, if there is no Certified Standing Order or Service Rules in place, the salary may be withheld. If there is a Certified Standing Order or Service Rules, the salary must be paid according to the provisions of the Subsistence Allowance Act (50% of the salary drawn at the time of suspension for the first three months and 75% for subsequent months until dismissal).

If an employee arrives 1 hour late, can that hour's salary be deducted?

The deduction of salary for arriving late depends on the company's policy. For instance, some companies have a policy that if an employee is late for three consecutive days, they must forfeit one day's leave. If the employee has no leave remaining, one day's salary may be deducted. It is essential to inform employees of the consequences of late attendance.

What legal factors apply to the above three cases?

In addition to company policy, these scenarios are governed by relevant labor laws such as the Payment of Wages Act, Shops & Establishments Act, Standing Order Act, and Industrial Disputes Act.

Regards,
P. S. Lakshmanan
S. G. Management Services
Kolkata

Understanding Leave and Leave Without Pay (LWP)

I think we should get our concepts clear on leave and LWP. The dictionary meaning of leave is permission. LWP can be authorized or unauthorized. Authorized LWP is when an employee is granted permission to avail leave of absence on loss of pay, usually because he/she has no leave balance in his/her account. In this case, it will not result in any disciplinary action because prior permission is granted.

In another situation, when any employee chooses to remain absent without leave to the credit and without permission, this act will call for suitable disciplinary action such as a show cause notice, the issue of a chargesheet, conducting a domestic enquiry followed by an appropriate punishment if charges are proved.

Salary Deductions and Disciplinary Actions

The HR has no right to hold salary for LWP unless the employee is suspended pending an enquiry, in which case only subsistence allowance is payable as per MSO.

For late coming, salary can be deducted on a pro-rata basis on the principle of no work, no pay, as has been pointed out, subject to rules framed and properly communicated to all employees.

Regards,
Vinayak Nagarkar
HR Consultant